Sea Island gets OK of settlement resolving liquidation plan disputes

By Caroline Salls

Pittsburgh, Nov. 5 - Sea Island Co. received court approval of a settlement with its secured lenders and unsecured creditors committee resolving disputes between the parties regarding the company's plan of liquidation, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of Georgia.

Under the agreement, if holders of other general unsecured claims vote to accept the plan, the accepting unsecured creditors fund would be increased to $6.33 million from $3 million.

The company said this increase would resolve any disputes, claims or rights between the parties regarding the allocation of sale proceeds between encumbered and unencumbered property.

The secured lenders will provide $217,013 from their allocation of proceeds to fund the administrative costs of the liquidating trust.

Also under the settlement, at auction, the prevailing bid received a dollar-for-dollar credit for the assumption of an additional $440,520 in deferred compensation owed to participants in the company's deferred compensation plan who were not listed on the schedule included in the asset purchase agreement and $1.26 million in obligations owed under the company's deferred compensation supplement plan.

The creditors committee has agreed not to contest or otherwise challenge the secured lender claims and liens unless the plan is not confirmed or the effective date does not occur before Dec. 15.

The secured lender deficiency claims will equal 50% of other general unsecured claims, provided that the secured lenders will not receive a distribution on account of or from the accepting unsecured creditors fund as increased by the settlement agreement.

Sea Island, a St. Simons Island, Ga., resort operator, filed for bankruptcy on Aug. 10. The Chapter 11 case number is 10-21034.

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